The relocation of industries to emerging markets have divided economists and policymakers.
Industrial policy in the form of government subsidies can lead other nations to strike back by doing exactly the same, that may affect the global economy, stability and diplomatic relations. This is extremely high-risk due to the fact overall economic effects of subsidies on efficiency continue to be uncertain. Despite the fact that subsidies may stimulate economic activity and produce jobs within the short run, however in the future, they are apt to be less favourable. If subsidies aren't accompanied by a number of other actions that target productivity and competitiveness, they will probably hinder necessary structural adjustments. Thus, companies becomes less adaptive, which reduces development, as business CEOs like Nadhmi Al Nasr likely have noticed throughout their careers. Therefore, undoubtedly better if policymakers were to concentrate on finding a method that encourages market driven growth instead of obsolete policy.
Critics of globalisation say it has led to the relocation of industries to emerging markets, causing job losses and increased reliance on other nations. In response, they suggest that governments should relocate industries by implementing industrial policy. But, this perspective does not acknowledge the dynamic nature of worldwide markets and neglects the rationale for globalisation and free trade. The transfer of industry had been mainly driven by sound financial calculations, specifically, businesses look for cost-effective operations. There clearly was and still is a competitive advantage in emerging markets; they offer numerous resources, lower production expenses, large customer markets and favourable demographic patterns. Today, major companies run across borders, tapping into global supply chains and gaining the advantages of free trade as company CEOs like Naser Bustami and like Amin H. Nasser may likely aver.
History shows that industrial policies have only had limited success. Various countries applied various kinds of industrial policies to promote certain industries or sectors. Nonetheless, the outcomes have usually fallen short of expectations. Take, for example, the experiences of a few Asian countries in the twentieth century, where extensive government input and subsidies never materialised in sustained economic growth or the desired transformation they envisaged. Two economists analysed the effect of government-introduced policies, including cheap credit to enhance production and exports, and compared companies which received help to the ones that did not. They figured that during the initial phases of industrialisation, governments can play a positive role in developing companies. Although antique, macro policy, such as limited deficits and stable exchange rates, also needs to be given credit. Nevertheless, data shows that helping one firm with subsidies has a tendency to damage others. Additionally, subsidies permit the endurance of inefficient companies, making companies less competitive. Moreover, when businesses focus on securing subsidies instead of prioritising innovation and effectiveness, they eliminate resources from productive usage. Because of this, the overall economic effect of subsidies on efficiency is uncertain and perhaps not positive.